Will a loyalty program give Americans more reasons to shop at Target?

Target announced yesterday that it would roll out its new Target Circle rewards program nationwide following an 18-month test that produced “overwhelmingly positive” results.

More than two million people joined Target Circle as a result of the pilot run at stores in the Charlotte, Dallas-Ft. Worth, Denver, Indianapolis, Kansas City and Phoenix markets. More than 14 million Circle transactions have been conducted to date.

Target, which will launch its rewards program on Oct. 6, is looking to give consumers more reasons to buy from the retailer heading into the Christmas selling season. The program, which is free, will enable Target Circle members to earn one percent back on purchases that can be used on future shopping trips. Other perks include personalized deals and perks, including a surprise on members’ birthdays. Members will also receive early access to sales conducted by Target over the course of a year.

“Our guests are at the center of everything we do, and we’re always looking for ways to create even easier, more rewarding shopping experiences that give them another reason to choose Target,” said Rick Gomez, Target’s chief marketing and digital officer, in a statement.

Individuals who have accounts on Target.com, Target’s Cartwheel digital discount and coupon program or who make purchases using the chain’s REDcard will be automatically enrolled in the new program when it goes live next month.

The retailer said the new loyalty scheme is meant to complement its successful REDcard debit and credit card program. That program provides cardholders with a five percent discount on purchases made from the retailer’s stores and website along with other perks, such as free shipping on online orders.

DISCUSSION QUESTIONS: How do you think the launch of Target Circle will affect the retailer’s business going into the Christmas holiday and beyond? Do you expect other large retailers not currently offering a rewards program will follow suit?

My Target store has been trialing the Circle program for the last few months, and I have to say at this point all I am is confused. I don’t understand the benefits, I don’t understand what it gives me that is different than Cartwheel, I just don’t get it. I use the Target app and the mobile wallet to pay, and at this point just ignore everything else because I don’t want to have to invest that much time in figuring it out.

I would take that as a bad sign overall for the program’s prospects to move the needle in anything more than the short term.

I sure seem to be down on Target lately! But there are several things they’ve done recently that just have not resonated with me, and Circle is definitely one of those. Let’s hope they resonate better with other customers.

The main benefit is the 1 percent you earn on all purchases; this can be saved and then spent on whatever you want in Target. Previously, only REDcard holders (debit or credit) received 5 percent off; other users of Cartwheel got no such benefits.

There are other things too, like getting votes to direct charity donations from Target to local causes. Plus a 5 percent discount for shopping on your birthday.

Maybe Target hasn’t explained this well in all markets. We’ve had the trial in Phoenix from the start and there was a lot of radio advertising, in-store POS material, and trained associates to explain the scheme. I think this helped get the message across here.

Nikki, I think you nailed it, not just for Target, but for too many “loyalty” programs. As you wrote: “I use the Target app and the mobile wallet to pay, and at this point just ignore everything else because I don’t want to have to invest that much time in figuring it out.”

I feel like starting a loyalty program now is being late to the game. However the data attainable can be very valuable if it is used properly. Consumers must however feel that they are getting something of value back for sharing their data. There are so many stories of customer-specific actions by retailers feeling “creepy” – avoiding this is key. The big question is: Is 1 percent back enough? Setting this up in the run up to the holiday period makes sense for this reason… it could well pull in new wallet share!

REDcard, Cartwheel, Target Circle … For now these programs seem to be complementary, however Target could be at the tipping point of over-complicating its loyalty and promotional offerings. Hopefully Target is gathering meaningful data on how shoppers are moving between the programs and taking the opportunity to make refinements leading into the holiday shopping season. Glitch-free, seamless synergy will be key to adoption and value-add perception. Confusion will alienate customers.

Agreed Carol that Target needs to be careful how it balances all of these different initiatives to make sure they don’t cause confusion. It seems like they all cater to different customer segments for now, which is a positive. And 1 percent base earning certainly is not a huge incentive so they must have bigger plans for how to utilize variable earning promotions/vendor partners and leverage the data for personalized marketing — or at least one would hope!

Target Circle isn’t revolutionary, but it is helpful. Our household signed up as soon as the trial was opened in Phoenix. It has made us divert more of our spend to Target, especially for everyday and household goods purchases. A 1 percent reward doesn’t sound like a lot, but it soon adds up. Data I’ve seen suggests that a similar trend holds true for other Circle members. And of course, on top of all this, Target gets loads more data on its shoppers!

I agree with Nikki. The multiple programs from Target are confusing. The key to any loyalty program is that it needs to be easy to understand, sign-up for and use. While loyalty programs are now table stakes, I am not sure how much it will impact Target’s business during the holiday season.

With online shopping becoming pervasive for holiday shopping, free shipping is more important than a 1 percent loyalty perk, IMHO.

My wife is a big fan of the Cartwheel app and uses it regularly. I’m not sure 1 percent cash back and a birthday surprise is much of an incentive in the Circle program but as long as the other features from the REDcard and Cartwheel programs are all integrated seamlessly into this new program, it will at least be a consistent one-stop shop for Target loyalists.

Target has stumbled a couple of times with its various loyalty programs, and now it has so many things going on that, as a “guest,” it’s hard to keep track of them all.

Circle, REDcard, Restock, Shipt, DriveUp, and is Cartwheel still here or is that gone now? You need a program to keep track of the programs. Target is trying hard, but needs to keep it simple for shoppers. Have it in stock, help me save money, and give me options for purchase.

Once the first airline had a frequent flyer mileage program, they all had to have it. “Membership has its rewards.” It seems like a loyalty program of some kind is table stakes these days. Except — is it really loyalty when everybody has their version in play? The playing field has been leveled so the customer gets the goodies wherever they shop. Just like everything is on sale everywhere all the time (this is a slight exaggeration). What is the truly distinguishing and differentiating element?

This program is designed to engage more customers than they have been able to get signed up for their REDcard or Cartwheel. The launch of the program might have a slight impact on the holiday season as the 1 percent back helps more customers consider Target for their shopping.

But the real impact will not be driven by the 1 percent back and it will not be seen in the short term. Effective loyalty programs don’t spike sales, but instead result in steady sales growth over time. Done well, the program can help Target establish a dialogue with more of their customers and strengthen the connection each customer has with Target. If they can accomplish that, the program will be a winner.

Call it what you want – a loyalty program or continuity of purchase program, what is unique about the latest Target program? At the end of the day all retailers need to be loyal to their customers. How? By delivering on their unique promise – the focus is on unique, not “me too.”

Target has been on a roll lately by remerchandising its stores, introducing a new private brand in the grocery department and improving its e-commerce experience and home delivery program. All of these improvements have been made with the consumer’s needs front and center.

This seems to be a great time for them to launch the program nationally because it will allow their shoppers some time to accrue some benefits before the key holiday purchases. I agree with Carol, the key for this program is to make it simple as possible to use and integrate within their other programs. Busy moms, dads, Millennials and other shoppers will likely have limited patience to work through a maze of programs.

I’m not sure how getting more intimate with your customer could be a bad thing. I firmly believe loyalty is the way to go but it has to be frictionless (like Whole Foods) to work effectively. When you break you customer base into deciles and understand the universal rule is a 20 percent/80 percent breakdown with 20 percent of customers accounting for 80 percent of the sales it is easily provable that increasing that base will will drive sales — it’s just math and that appears to be just what Target did.

Target seems to have a lot on its plate in the loyalty segment. Rolling the Circle out nationally before the holiday shopping season is a smart move. It will draw more interest because of the volume of people shopping that time of year. The key will be how customers choose to use it after the holidays are over.

0

|

0

- ShareHide Replies ∧

Braintrust

"Glitch-free, seamless synergy will be key to adoption and value-add perception. Confusion will alienate customers."